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Budgeted Income Statement and Supporting Budgets The budget director of Birds of a Feather Inc., with...

Budgeted Income Statement and Supporting Budgets

The budget director of Birds of a Feather Inc., with the assistance of the controller, treasurer, production manager, and sales manager, has gathered the following data for use in developing the budgeted income statement for January:

  1. Estimated sales for January:
      Birdhouse 6,000 units at $55 per unit
      Bird feeder 4,500 units at $75 per unit
  2. Estimated inventories at January 1:
    Direct materials:
      Wood 220 ft.
      Plastic 250 lb.
    Finished products:
      Birdhouse 300 units at $23 per unit
      Bird feeder 240 units at $34 per unit
  3. Desired inventories at January 31:
    Direct materials:
      Wood 180 ft.
      Plastic 210 lb.
    Finished products:
      Birdhouse 340 units at $23 per unit
      Bird feeder 200 units at $34 per unit
  4. Direct materials used in production:
    In manufacture of BirdHouse:
      Wood 0.80 ft. per unit of product
      Plastic 0.50 lb. per unit of product
    In manufacture of Bird Feeder:
      Wood 1.20 ft. per unit of product
      Plastic 0.75 lb. per unit of product
  5. Anticipated cost of purchases and beginning and ending inventory of direct materials:
      Wood $8.00 per ft.
      Plastic $1.20 per lb.
  6. Direct labor requirements:
    Birdhouse:
      Fabrication Department 0.20 hr. at $15 per hr.
      Assembly Department 0.30 hr. at $12 per hr.
    Bird Feeder:
      Fabrication Department 0.40 hr. at $15 per hr.
      Assembly Department 0.35 hr. at $12 per hr.
  7. Estimated factory overhead costs for January:
    Indirect factory wages $80,000
    Depreciation of plant and equipment 25,000
    Power and light 8,000
    Insurance and property tax 2,000
  8. Estimated operating expenses for January:
    Sales salaries expense $90,000
    Advertising expense 20,000
    Office salaries expense 18,000
    Depreciation expense—office equipment 800
    Telephone expense—selling 500
    Telephone expense—administrative 200
    Travel expense—selling 5,000
    Office supplies expense 250
    Miscellaneous administrative expense 450
  9. Estimated other income and expense for January:
    Interest revenue $300
    Interest expense 224
  10. Estimated tax rate: 30%

Required:

1. Prepare a sales budget for January.

Birds of a Feather Inc.
Sales Budget
For the Month Ending January 31
Unit Sales
Volume
Unit Selling
Price
Total Sales
Birdhouse
Bird feeder
Total revenue from sales $

2. Prepare a production budget for January.

Birds of a Feather Inc.
Production Budget
For the Month Ending January 31
Units
Birdhouse Bird Feeder
Expected units to be sold
Plus desired inventory, January 31
  Total
Less estimated inventory, January 1
Total units to be produced

3. Prepare a direct materials purchases budget for January.

Birds of a Feather Inc.
Direct Materials Purchases Budget
For the Month Ending January 31
Wood Plastic Total
Required units for production:
  Birdhouse
  Bird feeder
Plus desired units of inventory, January 31
Total
Less estimated units of inventory, January 1
Total units to be purchased
Unit price $ $
Total direct materials to be purchased $ $ $

4. Prepare a direct labor cost budget for January.

Birds of a Feather Inc.
Direct Labor Cost Budget
For the Month Ending January 31
Fabrication
Department
Assembly Department Total
Hours required for production:
Birdhouse
Bird feeder
Total
Hourly rate $ $
Total direct labor cost $ $ $

5. Prepare a factory overhead cost budget for January.

Birds of a Feather Inc.
Factory Overhead Cost Budget
For the Month Ending January 31
Indirect factory wages
Depreciation of plant and equipment
Power and light
Insurance and property tax
Total $

6. Prepare a cost of goods sold budget for January. Work in process at the beginning of January is estimated to be $29,000, and work in process at the end of January is estimated to be $35,400.

Birds of a Feather Inc.
Cost of Goods Sold Budget
For the Month Ending January 31
Direct materials:
   
   
  Cost of direct materials available for use
   
  Cost of direct materials placed in production
Total manufacturing costs
Total work in process during the period
Cost of goods manufactured
Cost of finished goods available for sale
Cost of goods sold $

7. Prepare a selling and administrative expenses budget for January.

Birds of a Feather Inc.
Selling and Administrative Expenses Budget
For the Month Ending January 31
Selling expenses:
Sales salaries expense
Advertising expense
Telephone expense—selling
Travel expense—selling
Total selling expenses
Administrative expenses:
Office salaries expense
Depreciation expense—office equipment
Telephone expense—administrative
Office supplies expense
Miscellaneous administrative expense
Total administrative expenses
Total operating expenses $

8. Prepare a budgeted income statement for January.

Birds of a Feather Inc.
Budgeted Income Statement
For the Month Ending January 31
Selling and administrative expenses:
Total selling and administrative expenses
Other revenue:
Other expenses:
$

Solutions

Expert Solution

Ans. 1 Birding Homes & Feeders Inc.
Sales Budget
For the Month Ending January 31
Unit Sales Volume (a) Unit Selling Price (b) Total Sales (a*b)
Bird house 6000 $55 $330,000
Bird feeder 4500 $75 $337,500
Total revenue from sales $667,500
Ans. 2 Birding Homes & Feeders Inc.
Production Budget
For the Month Ending January 31
Particulars Bird house Bird feeder
Expected units to be sold 6000 4500
Add: Desired ending finished inventory 340 200
Total required units 6340 4700
Less: Beginning finished inventory units -300 -240
Units to be produced 6040 4460
Ans. 3 Birding Homes & Feeders Inc.
Direct Materials Purchases Budget
For the Month Ending January 31
Wood Plastic Total
Required units for production:
Bird house 4832 3020
Bird feeder 5352 3345
Add: Desired units of ending materials inventory 180 210
Total units available 10364 6575
Less: Estimated beginning materials inventory -220 -250
Total units to be purchased 10144 6325
(*) Unit price $8.00 $1.20
Total direct materials to be purchased $81,152 $7,590 $88,742
*Calculations:
Required units for production =   Units produced * Materials required per unit
Wood Plastic
Required units for production:
Bird house 6,040 * 0.80 ft 6,040 * 0.50 lb
Bird feeder 4,460 * 1.20 ft 4,460 * 0.75 lb
Ans. 4 Birding Homes & Feeders Inc.
Direct Labor Cost Budget
For the Month Ending January 31
Fabrication Department Assembly Department Total
Hours required for production:
Bird house 1208 1812
Bird feeder 1784 1561
Total 2992 3373
(*) Hourly rate $15.00 $12.00
Total direct labor cost $44,880 $40,476 $85,356
*Calculations:
Hours required for production = Units produced * Direct labor hours per unit
Fabrication Department Assembly Department
Hours required for production:
Bird house 6,040 * 0.20 hr. 6,040 * 0.30 hr.
Bird feeder 4,460 * 0.40 hr. 4,460 * 0.35 hr.

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